General election to jeopardise stability in used car market
April and May traditionally see a fall in demand for used cars – the cumulative drop in trade prices for these months, taken as an average, over the last five years amounts to around 3.5% – but the general election could create further havoc.
'General elections have historically brought a slowdown in retail spending, caused by consumers' uncertainty,' explained Adrian Rushmore, managing editor at Glass's. 'In the weeks before and after the May 2005 general election used car sales fell by around 10%, and we anticipate a similar lull in 2010.'
Glass's points to several other factors that will disrupt the used car market. 'The arrival of bumper stocks of part-exchanged and de-fleeted company cars following the March registration-plate change will also contribute to some challenging conditions. This is because sales of new cars are expected to have reached a two-year peak in March,' added Mr Rushmore.
'The market will have to absorb a significant number of part-exchanges and ex-fleet cars in the second quarter, but there will be less dealer appetite to buy them. The relative stability experienced by the market so far in 2010 will soon end.'
A further concern will be the condition of vehicles reaching the market. 'It is expected that fleets will be offloading cars that have gone beyond the normal three years and 60,000 miles. Given that general market conditions are likely to be more demanding, these vehicles will remain less desirable until the price difference between these and tidier, ready-to-retail units gets much wider,' concluded Mr Rushmore.